DOJ Drops Unlicensed Money Transmitting Charge Against Tornado Cash Co-Founder

The U.S. Department of Justice (DOJ) has intensified its legal pursuit against Roman Storm, a developer of the cryptocurrency mixing service Tornado Cash. Storm, along with fellow co-founder Roman Semenov, faces charges of conspiracy to commit money laundering. The allegations center around the use of Tornado Cash to launder illicit funds, including those linked to North Korea's Lazarus Group. The DOJ's actions underscore the growing scrutiny and regulatory challenges surrounding privacy-focused cryptocurrency tools.

The legal proceedings against Storm highlight the complex regulatory landscape for cryptocurrency mixers. These tools, designed to enhance privacy by obscuring the trail of transactions, have come under intense scrutiny due to their potential misuse by criminal elements. The DOJ's charges against Storm and Semenov reflect broader concerns about the compliance of such privacy tools with existing financial regulations and sanctions.

In a significant development, the DOJ has decided to drop a portion of the charges against Storm. Specifically, the charge related to operating an unlicensed money-transmitting business has been dismissed. This decision comes after the Financial Crimes Enforcement Network (FinCEN) clarified in 2019 that "non-custodial entities" such as Tornado Cash are not classified as money transfer operators. The agency's guidance states that "The provider of anonymizing software is not a money remitter. The rules exclude from the definition those persons who provide only delivery, communication, or network access services used to transmit funds."

However, the DOJ maintains its prosecution on the core money laundering allegations, asserting that Storm knowingly facilitated the movement of illicit funds through Tornado Cash. The trial is set to begin in less than two months, and recent court documents show that prosecutors have agreed to drop the portion of the charge related to operating a money-transfer business without a license, acknowledging inconsistencies with federal regulations.

The legal battle against Storm and Tornado Cash is part of a broader effort by U.S. authorities to address the use of cryptocurrency in illicit activities. The DOJ's actions send a clear message to the cryptocurrency community about the importance of regulatory compliance and the potential consequences of non-compliance. As the legal proceedings continue, the outcome will likely have implications for the future of privacy-focused cryptocurrency tools and the regulatory framework governing their use.

Tornado Cash co-founder Alexey Pertsev was sentenced to more than five years in prison in May 2022 for laundering $1.2 billion through a mixer, but was released to electronic monitoring in February 2025 pending appeal. Tornado Cash found itself under OFAC sanctions in August 2022 due to its role in money laundering. According to the U.S. authorities, since the creation of the service, attackers have spent more than $7 billion through it. Tornado Cash was used in particular by the North Korean group Lazarus.

In January 2025, the U.S. Court of Appeals for the Fifth Circuit revoked the sanctions due to "abuse of authority" by OFAC and sent the case to the U.S. District Court for the Western District of Texas for further proceedings. The proceedings against Storm continue despite an internal service memo circulated last month about the DOJ changing its approach to handling cases involving cryptocurrency mixing services. It indicated that the agency would focus on prosecuting individuals who use crypto tools for criminal purposes, rather than prosecuting the platforms themselves.